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The Impact of Environmental Regulations on Enterprises’ Green Innovation: The Mediating Effect of Managers’ Environmental Awareness

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  • Deqin Lin

    (Faculty of Finance, City University of Macau, Macau 999078, China)

  • Yuetong Zhao

    (Institute for Research on Portuguese-Speaking Countries, City University of Macau, Macau 999078, China)

Abstract

It is of great significance to clarify the impact and mechanism of environmental regulations on enterprises’ green innovation. This paper empirically studies the impact of command-and-control environmental regulation (CCER) and market-incentive-based environmental regulation (MBER) on enterprises’ green innovation and tests the mediating effect of managers’ environmental awareness by using the data of Chinese A-share companies listed in the Shanghai and Shenzhen stock exchange from 2011 to 2020. The results show the following: 1. the CCER has a significant promoting effect on both the quantity and quality of green innovation, but the impact of the MBER is significantly negative; 2. managers’ environmental awareness has a mediating effect on the impact of the CCER, but there is no such mediating effect on the impact of the MBER; 3. The CCER has a strong promoting effect on the quantity and quality of the green innovation of heavily polluting state-owned enterprises with a high innovation capacity in central cities, while the MBER has a significant negative impact on the green innovation capacity of heavily polluting non-state-owned enterprises but can significantly promote the quantity and quality of enterprises’ green innovation with a high innovation capacity located in central cities. Finally, this paper gives some suggestions to promote the green innovation capacity of enterprises by optimizing the design of environmental regulation tools, improving managers’ environmental awareness and enhancing the degree of marketization.

Suggested Citation

  • Deqin Lin & Yuetong Zhao, 2023. "The Impact of Environmental Regulations on Enterprises’ Green Innovation: The Mediating Effect of Managers’ Environmental Awareness," Sustainability, MDPI, vol. 15(14), pages 1-26, July.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:14:p:10906-:d:1191985
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    References listed on IDEAS

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    1. Jie Zhang & Shilong Li, 2023. "The Impact of Human Capital on Green Technology Innovation—Moderating Role of Environmental Regulations," IJERPH, MDPI, vol. 20(6), pages 1-19, March.
    2. Karen Palmer & Wallace E. Oates & Paul R. Portney & Karen Palmer & Wallace E. Oates & Paul R. Portney, 2004. "Tightening Environmental Standards: The Benefit-Cost or the No-Cost Paradigm?," Chapters, in: Environmental Policy and Fiscal Federalism, chapter 3, pages 53-66, Edward Elgar Publishing.
    3. Fengyan Wang & Ziyuan Sun, 2022. "Does the Environmental Regulation Intensity and ESG Performance Have a Substitution Effect on the Impact of Enterprise Green Innovation: Evidence from China," IJERPH, MDPI, vol. 19(14), pages 1-24, July.
    4. David Gadenne & Jessica Kennedy & Catherine McKeiver, 2009. "An Empirical Study of Environmental Awareness and Practices in SMEs," Journal of Business Ethics, Springer, vol. 84(1), pages 45-63, January.
    5. Chen, Zhao & Kahn, Matthew E. & Liu, Yu & Wang, Zhi, 2018. "The consequences of spatially differentiated water pollution regulation in China," Journal of Environmental Economics and Management, Elsevier, vol. 88(C), pages 468-485.
    6. Jingjing Liu & Min Zhao & Chao Zhang & Fangrong Ren, 2023. "Analysis of the Influence of Heterogeneous Environmental Regulation on Green Technology Innovation," Sustainability, MDPI, vol. 15(4), pages 1-20, February.
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    Cited by:

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    2. Xianna Su & Shujuan Ding, 2024. "Research on the Configuration Paths of Low-Carbon Transformation of Heavily Polluting Enterprises," Sustainability, MDPI, vol. 16(14), pages 1-19, July.
    3. Jing Cheng & Liping Li & Shixuan Tong & Changsheng Liu, 2025. "Breaking the Cost Barrier: How Environmental Policy Intensity and Cost Stickiness Shape Green Innovation in China’s Manufacturing Sector," Sustainability, MDPI, vol. 17(7), pages 1-18, March.
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    7. Shanshan Yue & Saleh F. A. Khatib & Norkhairul Hafiz Bajuri & Hamid Ghazi H Sulimany & Yini Lee, 2025. "Executive Ownership and Minority Shareholder Protection: Drivers of Environmental Innovation in China's A‐Share Market," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 32(3), pages 3854-3873, May.
    8. Hongmin Zhang & Jinghua Zhang, 2023. "Pollution Transfer under Intergovernmental Competition: Suppression or Opportunity," Sustainability, MDPI, vol. 15(21), pages 1-18, October.
    9. Gedi Ji & Qisheng Wang & Qing Chang & Yu Fang & Jianglin Bi & Ming Chen, 2024. "Evolutionary Game Analysis of Government Regulation on Green Innovation Behavior Decision-Making of Energy Enterprises," Sustainability, MDPI, vol. 16(17), pages 1-18, August.

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